Q&A: Striking the right balance with office space

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​​​​​​​​​​​​​​​​​​​​22 March 2​016​​​

Q&A: Striking the right balance with office space

Asia Pacific is a key driver of global growth and many businesses are establishing head offices and outsourcing centers in the region. As companies embark on expansion plans, many are asking what should be the optimum amount of office space.

In Hong Kong, where office rents are the world’s most expensive, workstations are shrinking, which could impact productivity. In Manila, outsourcing demand has sent office rents rising, while in Australia and New Zealand, workstations are typically larger.

Optimization planning is an ongoing process. Organizations continually need to adjust their workspace to meet changing market and economic conditions. Meanwhile technology is increasingly making the workplace more mobile.

Occupiers today are focused on creating the most productive environment for their workforce, while at the same time reducing occupancy costs and supporting employee expectations for the work environment that provides flexibility for mobile working, business travel and work/life balance. To this end, businesses are approaching the procurement of office space with very specific ideas and metrics on which to base the design of the workplace.

A key concern is the under-utilization of workspaces. JLL’s analysis shows that average vacancy (of desk space) may reach as much as 30 percent.

With real estate being the second largest cost for companies, questions are being asked about how do you add employees without adding facilities and what is the optimum space requ​ired to ensure employees are comfortable and productive. Here JLL's
Julie Brown, Head of Occupancy Planning for Asia Pacific​, provides some answers for businesses, which are constantly battling cost and density.

What are the common pitfalls for companies when it comes to analyzing the space they require? Many companies just focus on their largest locations and only analyze their space when challenged to cut costs or make a real estate investment.

Other risks to real estate teams are ignoring the actual space utilization over time and understanding the detailed business requirements that influence space use.

Understanding behaviors and how workers collaborate and solve problems effectively is also important. For example, we performed an occupancy study for a global technology company and concluded that the collaboration spaces were unused – until we discovered there were regular meetings held in the lobby coffee shop where the beverages were tastier.

What are recent trends in workspaces? Companies are embracing the concept of having collaboration areas, and recognize that providing a variety of workspaces can benefit employees.

Many of us do different types of work throughout the day. With the appropriate technology and workspace, I can use a large monitor sitting in a task chair for analytical work with spreadsheets of data, move myself and laptop to a fresh and comfortable environment to quickly review a contract, then relocate to a hush room for a confidential call through my laptop. In addition to cost benefits for employers, there are also potentially productivity and efficiency benefits as well.

What are latest technologies that will be able to help companies rationalize required workspaces? Everyone is talking about utilization tracking, and for good reason. Understanding how many people are in the buildings, where and with whom they are working – at a business level - can increase productivity and decrease real estate costs. This is an area in which we will continue to see a lot of activity and innovation. We are tracking various levels of utilization for our clients and developing ways to adhere to privacy concerns and costs, yet provide deeper and more unique insights into client space activity.

Potentially, what savings should companies expect? We work with companies looking to reduce their space and cost. Our teams typically find 10 percent of “hidden vacancy” with new client engagements. Closer analysis and a continuous focus on business unit demand and occupancy data increases opportunities to cut costs. With high growth companies, it is just as important to stay focused on occupancy and know the right time to invest in real estate.

The savings increase substantially when reducing the lease costs. And conversely, these same amounts are delayed when real estate expansion is properly managed. Our work with a leading global healthcare services company generated nearly US$50 million in return on investment for the client across four years, with the bulk of these benefits realized in the backend of this period after the initial setup and implementation costs had been covered.